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I've always thought about how Bronze Age had trouble supporting an army of culture X in a province populated by culture Y; cultural assimilation certainly makes sense.

I should add that Wikipedia has the list of historically largest cities; the recordholder was consistently in the tens of thousands (and was pretty consistently a capital, much like Rome was in the iron age), so later on you may wish to consider a simple multiplier for the capital region. Then again, you may have already planned for that! ;)

Actually that sounds about in line with what I have planned. Cities won't be just a single tile, but a bunch of "urbanized" tiles next to each other. Urbanized tiles will also be able to house multiple pops.

More on that in a bit, as it gets closer to development.